The country’s exports grew 5.37 percent year-on-year to USD 27.24 billion in January 2021, mainly driven by healthy growth in pharmaceuticals and engineering sectors, according to provisional data of the commerce ministry.
Imports during the month rose 2 percent to USD 42 billion, leaving a trade deficit of USD 14.75 billion, the data showed.
“The rise in both merchandise exports and imports in January 2021 is heartening, signifying a continued strengthening of the domestic growth recovery. With the merchandise trade deficit has risen to $14-15 billion over the last two months, we expect the current account balance to slip back into a deficit in H2 FY21,” Aditi Nayar, principal economist at ICRA Ltd, said.
Major export items that helped India’s outbound shipments turn the corner include drugs and pharmaceuticals (up 16.4%), engineering goods (18.69%), and iron ore (108.66%). A sharp contraction in readymade garments (-10.73%) and petroleum products (-37.34%) kept overall growth minimal.
India’s merchandise trade had been weakening even before the pandemic hit the economy and external demand. Exports were negative in 15 of the past 19 months starting June 2019. Since March 2020, both exports and imports started declining in high double digits, even temporarily leading to a trade surplus in June for the first time in 18 years.
Data compiled by the World Trade Organization (WTO) showed global merchandise trade had declined by 21% in the June quarter. WTO now projects the volume of world merchandise trade to decline 9.2% in 2020, followed by a 7.2% rise in 2021. In April, it had projected global merchandise trade to drop by 13% to 32% in 2020 because of covid-19.
Exports of pharmaceuticals and engineering grew 16.4 percent (USD 293 million), and about 19 percent (USD 1.16 billion), respectively.
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